Kolosus and Daun merger given the green light
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KwaZulu-Natal Correspondent
DURBAN The Competition Commission yesterday gave the green light to the merger between Kolosus Holdings and Daun et Cie.
It recommended that unconditional approval be given to the merger between the animal hide and skins company and that owned by German entrepreneur Claus Daun when the issue appears before the Competition Tribunal.
This was despite the merger leading to "some retrenchments".
The commission said the job losses envisaged were "not unreasonable" and did not justify prohibiting the transaction. The move further expands Daun's investment in SA, which began shortly after former president Nelson Mandela was released from prison. Daun has invested in furniture, clothing and textiles and the motor industry.
Kolosus and Daun are active in the animal hide and skins industries. The majority of hides in SA are sold to the automotive industry and the commission recognised that both parties were dominant players in the procurement and sale of processed leather used in the manufacturing of car seats.
In terms of the merger, Daun will acquire control of Kolosus. The value of the deal remains undisclosed.
Nkonzo Hlatshwayo , commission merger and acquisitions division manager, said the merged entity would become the dominant player in the procurement of raw hides and the sale of automotive wet-blues (processed leather).
"However, the local demand for wet-blues exceeds supply by 40% because of the motor industry development programme ," he said.
Hlatshwayo said as a result the merged parties would not increase market power. Since most skins were exported, the merger would not harm the consumer.
Hlatshwayo said the transaction raised issues of input foreclosure, or the ability to put competitors out of business. Since imports were an alternative to local wet-blues, there was no risk of foreclosure.
May 09 2003 06:55:16:000AM Nicola Jenvey Business Day 1st Edition
Friday
09 May 2003
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